Voluntary pay cuts and an operating model review are among new measures announced today by Auckland Council to reduce the financial impact of COVID-19.
Like many New Zealand businesses, the council’s revenue has fallen dramatically in the last two months. In addition, there have also been unexpected and unbudgeted costs associated with its COVID-19 response.
Auckland Council chief executive Stephen Town says new measures to mitigate the financial impact have now been agreed and will be implemented over the next six months.
“Firstly, we have taken the step today to ask all staff earning over $100,000 per annum to take a voluntary pay reduction for six months,” says Mr Town.
“This will be a tiered approach, meaning a 5 per cent reduction for anyone earning between $100,000 and $175,000, a 7.5 per cent reduction for anyone earning between $175,001 and $275,000 and a 10 per cent reduction for anyone earning above $275,001.”
Mr Town says the council is also in discussion with the PSA on options relating to this year’s annual remuneration review for staff, and whether it should be limited or cancelled. Those discussions will continue over the coming weeks.
“On top of these measures, we are also beginning a comprehensive review of Auckland Council’s operating model, with a view to begin implementing some changes by 1 August 2020,” he says.
“We anticipate that this review will result in a reduction in our permanent workforce, however it is too early to say exactly how many roles will be affected.”
Mr Town says the organisation is committed to supporting staff through the changes while delivering on its commitments to Aucklanders.
“Our staff are already working hard to deliver essential services to Aucklanders, support Auckland’s welfare and recovery response, and get many of our much-loved services back up and running this week,” he says.
“Alongside supporting them through the next six months, we remain focused on ensuring these essential services continue to be delivered both now and in the future.”
Auckland Mayor Phil Goff says, “The request to council staff to take voluntary salary reductions reflects the severity of the impact of COVID-19 on the council, which runs into a loss of hundreds of millions of dollars in revenue.”
It follows a similar request made of Auckland Transport staff in recent weeks.
“I welcome the overwhelming support of staff within Auckland Transport for volunteering to accept salary cuts proportionate to their income given the crisis situation, and also the decision by chief executives and boards across the council group, who have also taken voluntary pay reductions of 10 to 20 per cent.
“With legislation passed last week by Parliament, councillors can now request a voluntary reduction in their salary, with the savings returned to the council to support essential service delivery. I welcome the indication by many in a position to do so, to take cuts of up to 20 per cent, including myself and the Deputy Mayor.”
Measures already undertaken by the council to mitigate the financial impact of COVID-19 include:
- A review of 1100 non-permanent employees, and pausing non-essential contractors and temps, plus external supplier contracts
- Reducing operational activity and spending to focus on essential services only
- Announcing voluntary pay cuts for the chief executives, senior executive team members, CCO board chairs and board directors
- Pausing all recruitment, and requiring any exceptions to have approval of the Executive Leadership Team
- A focus on reducing time-off-in-lieu and annual leave balances.